About $10 billion over seven years. That's how much has been pumped into the motor industry by federal and state governments.

Now that Ford is closing local manufacturing in 2016, some analysts say it has been throwing good money after bad, but others say the handouts were the only way to keep the declining sector alive.

Ford Australia president Bob Graziano said for every $1 of subsidies given to his company, it returned $6 back to the economy. But at the same time, he pointed out that the firm's cost structures in Australia were uncompetitive.

The strong dollar has made local exports less competitive and overseas imports more attractive. Photo: Paul Rovere

''Our costs are double that of Europe, and nearly four times Ford in Asia,'' he said, adding Ford Australia made a net loss of $141 million in the past financial year and had a total loss of $600 million over the past five years.

The Australian motor industry has struggled since the global financial crisis and as people switched to smaller, more fuel-efficient cars, market research firm IBIS World said in a February report.

Across the manufacturing sector, lower tariffs and protection has led to increased overseas competition. More recently, the strong dollar has made local exports less competitive and overseas imports more attractive. The number of vehicles made in Australia has fallen from more than 334,772 in 2007 to 221,224 last year.

Car industry analyst Danny Samson said the handouts - in 2011 the federal government commited $5.4 billion in subsidies to 2020 - kept the industry in Australia for three decades more than it otherwise would have been. ''Every country that has a car industry has government subsidies. It's just the way it works to keep those jobs,'' said Dr Samson, a University of Melbourne management professor.

In contrast, economics researcher Simon Cowan at The Centre for Independent Studies said the industry's continued shedding of jobs showed the government aid was short-term and ''clearly not working''. Last month Holden said it would cut 500 jobs, five months after it laid off 170 workers.

''There is a significant over-investment in the automotive industry globally,'' he said. ''What we could be doing instead of trying to fight battles with countries that are much more effective than us [is] liberalising our markets and using this to push for freer trade in industries like the cattle industry.''

Australian Automotive Intelligence consultant Richard Johns said net assistance to the sector has fallen considerably as tariffs dropped from 57.5 per cent in 1985 to 5 per cent, and that the subsidies ''ensured that the industry has gone as far as it has''.

23 May
Tony Abbott's initial reluctance to score big political points from Ford's decision to stop making cars in Australia tells us two things: the first is that he's a more measured politician than he used to be; the second is that there aren't many points to score.